Napoleon has left the building

Written by Rick Spence
What really happens when you sell your business? Sure, professional advisers can lead you through the technical steps, but what about the personal issues? I draw four conclusions after talking with two entrepreneurs who recently went through the gut-tearing process of selling, but not selling out.

  1. Selling your business is a test of your character and values.
  2. You can stay with the company and work for the new owner. But it probably won’t work.
  3. A successful sale changes your outlook on work, money and life.
  4. You’ll always wonder what might have happened if you hadn’t sold.

Greg Kiessling, the 43-year-old co-founder of Toronto-based Sitraka Inc., says his firm was Canada’s largest self-financed software developer — “which made us either brilliant or stupid.” Sitraka, founded in 1989 as KL Group, became uniquely expert in troubleshooting Java applications and other niches that enabled Kiessling and his partner, Ed Lycklama, to deflect numerous overtures from potential investors and acquisitors.

But in summer 2002, as Sitraka was working on a product that required the support of a worldwide direct salesforce, it received a takeover offer from California-based Quest Software Inc. The timing was right — Kiessling wanted to devote more time to his wife, two young children and a new cottage — and so was the money. “The offer was good enough that we really had to take it seriously,” says Kiessling. He and Lycklama quietly probed their senior managers, and they too were ready to cash out.

Just as important as the money was Kiessling’s feeling that Quest offered the right fit for Sitraka’s people. He had known Quest for some time and felt that his employees would be respected and treated well. Still, every change is a risk, he says: “You can never really know.”

Kiessling did know he wasn’t a big-company guy. He committed to stay through the transition phase to watch over the interests of employees and customers. “I immediately started disengaging from the day-to-day,” he says. With Sitraka’s president, Larry Humphries, staying on to run the new subsidiary, Kiessling figured he had done all he could. In May 2003, Kiessling left Sitraka.

Bill Tatham, 44, faced many of the same dilemmas at Janna Systems Inc., his Toronto-based producer of customer-management software for financial-services firms. From its launch in 1990, Janna grew into a formidable competitor with 1999 sales of $20 million.

Tatham had always kept his options open: “We started every year with the concept of financing the company, selling the company or building a business plan in which we didn’t have to do either.”

If you establish that selling is a possibility, he says, you then have to be clear on your personal financial objectives. “If you don’t know those,” he asks, “how do you know you’ve achieved financial success?”

By 2000, Janna was winning key contracts on Wall Street and its share price was soaring on the Toronto Stock Exchange. Having tired of 80-hour workweeks and realizing he’d reached his financial goals, Tatham was ready to consider an offer. After Janna snatched some deals from under the nose of Siebel Systems Inc., the Silicon Valley CRM giant acquired Janna in a $1.7-billion deal, paying twice the going rate for Janna stock. According to legend, the buyout created 28 millionaires in the company.

Agreeing to sell “is the most torturous decision you’ll ever make,” says Tatham. “You’ll have regrets, and you’ll wonder, but if you’ve done the analysis and set the criteria, that makes it a whole lot easier to accept.” He admits that he will have to live the rest of his life “not knowing how it would have turned out if I had stayed and continued to execute. But I can live with that.”

Siebel moved its institutional finance arm to Toronto, and Tatham stayed to run it — for a while. “I learned a lot at Siebel,” he says. “That exposure to the corporate environment was a valuable experience.” And, like Kiessling, Tatham stayed on as an “advocate” for the new company’s customers and employees.

After seven months, though, he knew it was time to go. “I went from being at the top of the organization to being many, many levels down, and that was tough to get used to,” he confesses. “As my dad told me, after you’ve spent a few years being Napoleon, it’s hard to go back to being a lieutenant.” In June 2001, Tatham left Siebel (stop me if you see a pattern here) to spend the summer with his family at the cottage.

Intriguingly, Tatham and Kiessling came to similar epiphanies while lazing on the dock. They’re back in business, but it’s not about money anymore: both are targeting investments in companies that have an ability to improve society.

Tatham’s company, Toronto-based XJ Partners Inc. (which includes most of his senior management team from Janna), is investing in a portfolio of healthcare companies that can help address some of society’s biggest medical and healthcare-delivery problems.

Kiessling has his own private investment company, Up Capital Ltd. It is especially targeting the alternative energy sector, plus high-tech companies and turnarounds in which his experience and investment can make a difference. But he’s also spending 20% of his time working with Pathways to Education, a program that helps disadvantaged children in Toronto’s Regent Park (close to the former Sitraka’s headquarters) go further in school. “It feels like an entrepreneurial startup,” says Kiessling, “only we’re achieving results for a worthy cause.”

You already knew that selling your business would change your life. But it may also change more than you think.

Rick Spence is a former editor of PROFIT.

© 2004 Rick Spence

Originally appeared on PROFITguide.com